Apple’s plan to set up a complete smartphone manufacturing ecosystem in India is gathering pace with around nine partners joining during the pandemic to help the iPhone maker, the country’s telecommunications and information technology minister revealed.
Efforts in India are a part of Apple’s moves to shift iPhone production away from China and reduce its dependence on the country.
“We want globally competitive companies to come to India. I can tell you today, during the Covid pandemic pressures, about eight-nine companies from the Apple ecosystem have come to India,” Minister Ravi Shankar Prasad said during an industry event. He said that the development underlines India’s attractiveness as an investment destination even during a period of economic stress.
Apple’s cable and connector supplier, Cheng Uei Precision Industry Co, is the latest company to enter India, and will soon begin mass production in the country’s southern state, Tamil Nadu, which also houses Foxconn’s iPhone facility.
The company’s second-largest contract manufacturer, Pegatron, is expected to establish its manufacturing facility in Tamil Nadu as well, having received approval from the Indian government under the Production Linked Incentives (PLI) scheme along with other Apple partners like Foxconn and Wistron.
Apple, however, Monday saw the freeze on signing of any new business contracts with Pegatron after the latter was found violating its supplier code of conduct. The Taiwanese company will not receive new business from Apple until it completes all corrective actions required.
According to an Economic Times report, the latest issue between both the companies is unlikely to impact India entry. “Pegatron would participate in the Rs 41,000 crore ($5.54 billion) production-linked incentive scheme from the year starting April 1, 2021, by when the issue with Apple is expected to have been resolved,” a person familiar with the matter told the publication.
Wistron, which currently makes iPhone SE (2020), has begun expansion of its facility near Bengaluru in Karnataka state and will hire 10,000 workers. It plans to invest around Rs 1,300 crore ($175 million) to expand its capacity from around 200,000 units per year to 400,000 units per year.
Foxconn is reportedly investing $1 billion investment in India to expand its factory in Tamil Nadu, that makes the iPhone XR. The investment will be made over a period of three years.
After a disastrous 2018, Apple had changed its India strategy and started offering discounts, buyback schemes along with financing options to drive sales in India. The change in strategy worked for Apple and it recorded its highest sales in the October-December quarter of 2019.
Apple’s India revenue jumped 29% at Rs 13,755.8 crore ($1.86 billion) in FY2020, while its net profit witnessed manifold growth at Rs 926.2 crore ($125.14 million) in FY20, driven by surging iPhone sales in the country. It reported a net profit of Rs 262.27 crore ($35.41 million) in the preceding fiscal period.
Apple CEO Tim Cook recently said the company had “set a September quarter record in India, thanks in part to a very strong reception to this quarter’s launch of our online store in the country”.
Apple launched its online store in India in September to further drive sales.
The demand for older generation iPhones along with the latest iPhone 12 series is expected to help Apple India clock around 16-22% year-on-year growth in smartphone shipments in the ongoing calendar year, according to analysts.